Global Production and Sourcing.

Introduction:

For this project I will be looking into the specific requirements TU at Sainsbury’s require around specific product types. I will be looking into Sainsbury’s TU toddler boy’s jersey wear. Researching into two countries of origin I will be looking into what management conditions, technological and economic issues that surround the choice from where Sainsbury’s choose to and how they are sourced and manufactured.

Sainsbury’s was founded in England, London in 1869 by John James Sainsbury, and grew rapidly during the Victorian era. Sainsbury’s grew to become the largest grocery retailer in 1922, pioneered self-service retailing in the UK, and had its peak of success during the 1980s. However in 1995 Tesco overtook Sainsbury’s to become the market leader, and Asda became the second largest in 2003, putting Sainsbury’s into third place. (Museum of London. Unknown. The Sainsbury’s archive [Online] 22.03.2012)

Sainsbury’s launched its TU fashion range in 2004, and is now housed in over 300 stores nationwide. Over the past six years, the retailer has seen its share of the £9.9bn value fashion market more than treble. The TU clothing range remains the UK’s seventh largest clothing brand by volume, TU kidswear however has gone from seventh place in 2011 to the UK’s sixth largest in 2012. (Drappers online, 2012, Sainsbury’s expected to reveal further gains in clothing market share. [Online] 22.03.2012)
The Sainsbury’s TU clothing distribution centres are located in, Coventry, Warwickshire and Bedford, Bedfordshire. Sainsbury’s also have a deport in Buntingford Hertfordshire. This deport however isn’t usually in operation, but the site is still owned by Sainsbury’s and is often used at busy times, particularly at Christmas. Originally Sainsbury’s ran its own distribution network. However after an industrial dispute with their drivers in the 1970s, and with the intention of streamlining and consolidation, much of the distribution is now contracted out, to distribution specialists. (Museum of London. Unknown. The Sainsbury’s archive [Online] 22.03.2012)

“Ever since we opened our first store in 1869, being a responsible retailer has been at the heart of the way we do things.
Whether it's helping our customers eat a healthy balanced diet, working closely with our suppliers and farmers, reducing the impact on the environment, playing an active role in the communities we serve, or making Sainsbury's a great place to work, being a responsible retailer is part of our heritage.” (Sainsbury’s. Online, Unknown)

In 2010 Sainsbury’s became the world’s largest retailer of Fairtrade products: almost one in every four pounds spent on Fairtrade in the UK is spent at a Sainsbury’s store.
Sainsbury’s have said that they form partnerships with their suppliers that help them raise environmental and social standards, and move towards real sustainability. In practice this means Sainsbury’s work with suppliers to consider all of the economic, environmental and social impacts of their activities. (J-Sainsbury Plc, 2012. Sourcing with Integrity [Online] 05.04.2012)
These days, for supermarkets sourcing with integrity is increasing in importance and is a major talking point. The public and Sainsbury’s customers are much more interested in where their food and other products come form, and how they are made. In total Sainsbury’s offer over 30,000 products in their stores, so sourcing is a complicated and challenging task. Sainsbury’s therefore say they run a series of development group initiatives designed to help their farmers and suppliers produce more sustainably. (J-Sainsbury Plc, 2012. Sourcing with Integrity [Online] 05.04.2012)

“Our Code of Conduct for Ethical Trade covers the employment practices we expect from our suppliers, both in the UK and abroad.” (J-Sainsbury Plc. 2012. Unknown)

Sainsbury’s know their customers want to be confident that the people who make and sell Sainsbury’s products are not being exploited, or exposed to unsafe working conditions.
All new suppliers are risk assessed prior to Sainsbury’s establishing a relationship and all are required to sign up to the Sainsbury’s terms and conditions which incorporates the code of conduct for Ethical Trade.
Organisations Sainsbury’s work with include the Ethical Trading Initiative,
“The Ethical Trading Initiative is a ground-breaking alliance of companies, trade unions and voluntary organisations. We work in partnership to improve the working lives of poor and vulnerable people across the globe who make or grow consumer goods - everything from tea to T-shirts, from flowers to footballs.” (Ethical Trade, 2012, Ethical Trading Initiative)

Sainsbury’s assessment tools determine the level of ethical trading risk of each supplier and require suppliers to undertake a third-party, independent ethical audit where necessary. This in depth analysis that allows Sainsbury’s to determine whether a supplier is eligible to work for them. Suppliers are required to ensure that the Sainsbury’s Code of Conduct is applied to their suppliers and sub-contractors. (J-Sainsbury Plc. 2012. Working in Partnership [Online] 24.03.2012)

Strengths

One of the biggest supermarket chains in the UK

Has an employee strength of over 15,000 people

Sainsbury’s has an extremely experienced leadership team

Sainsbury’s has over 800 stores in England, Wales and Scotland.

Each store typically stocks around 30,000 lines and around 20% are “own-label” goods.

Well known branding and advertising.

Sainsbury’s seems to be very well placed on green and environmental issues die to its carious recent initiatives, like buying in only Fair-Trade bananas

Sainsbury’s has a very positive effect on the public, it has a positive consumer brand and it’s liked by both green activists and consumers.

Celebrity endorsements, with Jamie Oliver and Gok Wan has lead to an increase in sales.

Weakness

Rising food, clothing and labour costs over the world has impacted on Sainsbury’s selling at higher prices.

Stiff competition within every segment of the retail sector.

Sainsbury’s is not yet present in any markets other then the UK, unlike Tesco which will keep them on top.

TU not seen as a trendy clothing store, trends change could leave large stock surplus,

Opportunities

Sainsbury’s could think about entering markets of emerging companies through joint ventures or partnerships to explore these new markets.

Expanding into growing economies like Africa and Asia.

Online sales, since online investments are higher and investments are not huge, putting Sainsbury’s TU range available to purchase online.

Threats

Increasing globalisation, presents a challenge as well as an opportunity to Sainsbury’s

Competitors becoming more ethical and sustainable

Maintaining a balance of continuous heavy investment in environmental and green issues without immediate benefits.

Other large names, Tesco, Asda, Morrisons also in competition. Need to constantly track trends.

Globalisation

Sainsbury’s are very well known for being ethical within their grocery department, so do they carry the support of ethical trading though to their TU clothing range. Retailers have to think about how to keep their customers happy by keeping goods on trend and affordable but also need to think about the working conditions for their workers over seas. The increase in globalisation means that it is easier for retailers to source products at low prices.

Globalisation refers to the increasing global relationships of culture, people, and economic activity. It is generally used to refer to economic globalization: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import quotas and the reduction of restrictions on the movement of capital and on investment. Globalisation may contribute to economic growth in developed and developing countries through increased specialization and the principle of comparative advantage. The term can also refer to the transnational circulation of ideas, languages, and popular culture. (O’Rourke. 2012 Lecture) Benefits of globalisation are the increase of choice, potential for growth, and the increase in international economies of scale. Also companies can use strengths of each country, where one country may excel in jersey manufacture another might excel in knitwear, and also the economic interdependency, companies can promote a greater understanding of other countries. (O’Rourke, 2012, Lecture) However companies like Sainsbury’s need to think about the affects of globalisation and how it can begin to cause problems, opponents of globalisation say it leads to exploitation of the worlds poor, and the environment, opponents claim that countries individual cultures are becoming overpowered by Americanisation. (O’Rourke, 2012, Lecture)

According to John Carolan head buyer of the childrenswear at Sainsbury’s the decision the retailer has to make on where to source is based on price, availability and speed to market, fashion pitch and fabrication, the quality in which the supplier produces and ethical aspects of production. Carolan says that direct sourcing to a factory is the most profitable route, direct to factory requires a fuller visibility of ethical production concerns and requires decision and management of country of origin, however controls needed mean it is a tougher assignment to carry out rather then going to an importer to fulfil product range development. An organisation will need certain tools to effectively carry out direct to factory sourcing, an ‘on the ground’ sourcing organisation, design route, time for factory briefing and an effective design route.
Sourcing direct to factory is the fastest way to source and only takes up to 4 weeks, also the control of production is more flexible to reaction to change. However this does higher labour costs, lower intake margins and lower profitability. (John Carolan. Lecturer. 2012)

Global Sourcing

Global sourcing is a procurement strategy aimed at exploiting global efficiencies in production, and a standard step in the global expansion of firms. The advantages of global sourcing include identifying alternate supplier sources, utilising buffer capacities and taking advantage of specific geographic talent pools. Global sourcing may reduce and control costs, free up internal resources, gain access to world class capabilities, and increase revenue potential. It also can reduce time to market, increase process efficiencies, and follow company philosophy of outsourcing non-core activities and compensate for lack of appropriate skills. (The free library, 2008, Smart sourcing in the global environment [Online] 20.04.2012)

Consumers during the 1st decade of the 21st century have become synonymous with a discount mindset. Global sourcing has been driven by this factor; in the future will fashion consumers value quality rarity and ethical principles as well as price? Like fashion trends which evolve and challenge us with new directions, so does the very nature of Global Sourcing, which is inextricably linked with fads and fashion. (O’Rourke, 2012. Lecture)

“We all buy various goods on a daily basis: from food and clothes to services. As consumers we do not always realise that we are at the end of a long supply chain, and that our new shirt or the chocolate bar has come a very long way before it reaches the shop we buy it form. Increasingly people in developing countries are making products we buy, and so what we choose to buy has an affect around the world.” (O’Rourke. 2012, Lecture)

China:

About/history:

China is the world’s largest exporter of textiles and garments, it is the largest cotton producing country in the world. Among 31 provinces in mainland China, 24 provinces produce cotton, and about 300 million people are involved in cotton production and although it has experienced wearer demand due to the global economic crisis, business had been recovering in the past two years. In 2010 exports of textiles and garments were creeping back to pre-crisis levels. (WGSN, 2011, Sourcing guide: China. [Online] 20.04.2012)
Manufacture of textiles and garments has played an increasing important role in Chinese economy since the government adopted its open-door policy in the late 1970s, since then the country’s large population and workforce have helped China become the world’s largest manufacturing market and the leading production market for the global textile and apparel trade. (WGSN, 2011, Sourcing guide: China. [Online] 20.04.2012)
The development of industry has been given considerable attention since the advent of the communist regime. Overall industrial output often has grown at an annual rate of more than 10 percent, and China’s industrial workforce probably exceeds the combined total for all other developing countries. Industry has surpassed all other sectors in economic growth and degree of modernisation. Most heavy industries and products deemed to be of national strategic importance remains state-owned, but an increasing proportion of lighter and consumer oriented manufacturing firms are privately held or are private-state joint ventures. (Chinese outpost, 2010, Industry and manufacture in China. 20.04.2012)

Resources and availability:

China has over 100,00 garment manufactures and over 10 million people employed in the garment industry, of which 70% are skilled and technical workers. There are over 50 industrial garment clusters in the country, which are characterised by particular types of product and account for 70% of total production.

It is said that China has the world’s largest manufacturing workforce, with over 112 million employed, and workers are considered highly efficient, often outperforming those in other low-cost markets. The basic wage in China is low however productivity bonuses are said to be high. However the era of China being one of the lowest cost countries in the Asia pacific areas looks to be coming to an end. (WGSN, 2011, Industry and manufacture in China: Labour [Online] 20.04.2012)

Rising labour costs in developing countries are starting to become an issue for suppliers, with more than 12 provinces and municipalities in the country raising their minimum wages by about 13% according to the BBC online. (BBC, 2011. China province raises minimum wage. 21.04.2012)

“Rising wages have prompted analysts to predict that China, previously known for its low cost of labour, could lose its edge as a manufacturing hub.
Manufacturers could look to countries such as Vietnam, Bangladesh and Cambodia where wages are still low.
However, Chinese authorities have been trying to boost domestic consumption and be less export dependent, and a rise in wages will encourage spending.” (BBC, 2011, BBC News online)

Transport:

China exports $1.47 trillion worth of goods each year, the US is Chinas biggest single market. Exports to the US account for $337.8 billion of which $52 billion is in apparel and footwear. Total exports to the EU are worth $300.5 billion.
Export prices have risen over the past year, while it is said that the volume of goods has slowed. The average price of garment exports rose 24.7% year on year in July, while the increase in volume was up just 0.9%.
China’s exports to emerging economies are accelerating faster than developed markets, exports to the BRIC economies are growing rapidly.
Since China’s accession to the World Trade Organisation in 2001, it has faced a series of anti-dumping investigations and the textile industry has been the second most affected sector, after chemical engineering. China has been involved in 313 trade remedy investigations from 2008 to the beginning of 2011, of which 35 cases involving $1.9 billion have targeted textile companies. (WGSN, 2011. Sourcing guide: China. [Online] 20.04.2012)

China freight’s work well for Sainsbury’s as they consist of air, shipping, road and rail. Manufactures have to choose from these various combinations of transport, they will select the most appropriate form of transportation; most companies will go for the cheapest and most convenient freight form. The most convenient for many companies being shipping, it is one of the cheapest and can also carry the large amounts of stock that large companies need. (O’Rourke, Lecture 2012)

“Today, the current fleet capacity is around 15.5 million TEUs. Since 2005, the total capacity has roughly doubled – literally.

Because of the imbalance of supply/demand, carriers are losing blood and even declaring a negative balance sheet for end of 2012 This situation pushes them to the dilemma of getting bigger or getting smaller. Getting bigger means buying new, larger ships. These ships let carriers to improve their cost effectiveness, work with smaller crews and lower their capital costs. On the other hand, some carriers are getting smaller; serving more niche markets where larger vessels will not call since that will reduce the efficiency of the vessel. You can imagine that a 15,000 TEU ship will not make 3 ports in the same country – if that country is not China.” (More Than Shipping, 2012, Importers and Exporters Can See Doubled Freight Rates by 2015 Worldwide [Online] 20.04.2012)

Critical Path:

Sep 15th – 20th - Supplier calculates fabric and trims needed, actual quantities and size breakdowns to give to factories and printers. Factory meeting is held to go through requirements and specification sheets. Order is placed for all fabrics and components.

Ordering Components:

Fabric - Lead time 4 weeks
Thread - in stock
Labels – Lead time 4 weeks
Size tabs – Lead time 2 weeks
Care Labels – Lead time 2 weeks
Swing ticket – Lead time 3 weeks

Oct 20th – Lab dip, labels, and notions approved by buyer. Licensing agreement sent off, for approval.

Oct 27th - All details have been approved and sent off to order.

Nov 27th – After 4 week’s bulk fabrics together with all components are due at the factory.

Nov 3rd – Fabric panels and lay plans have been sent to manufactures and cut out.

Nov 4th – Nov 11th - All fabric front panels sent to printers, for licensed print to be printed.

Nov 13th – Fabrics brought together to be manufactured. Production starts, appliqué and embroidery of Tee have been finalised, all pieces have been sent to manufacture to be assembled, and everything has been overlocked together, with a twin needle finish.

Dec 13th – AQL, final inspections made quality control inspection taken out by buyers on production of sample size. Sainsbury’s toddler boys this will be sizes 3 - 4.

Dec 20th – All goods packed and ready factory for shipping dispatch.

Jan 20th – Goods arrive at customs, to be checked before being dispatched to the warehouse.

Jan 27th – Goods arrive in store.
(J lee, Lecturer, 2012)

Costing sheet: Pepper Pig Tee. China.

Cotton: £1.00 per meter. ½ meter usage = £0.50p

Thread: £0.20p a reel

Care label: 1 = £0.02p each

Brand label: 2 - £0.04p each = £0.08p

Binding: £1.00 meter. 0.20 meters = £0.20p

Ribbing: £1.00 meter. 0.10 meters = £0.10p.

Swing tag: 2 - £0.05p each = £0.10p

Operations:

Laying and Cutting: £1.00 per hour. Timing 3 minutes = £0.05p

Licensing agreement: 12% (divide by 100 and times 12) 6.50.

Printing: £0.80p per hour. Timing 2 minute = £0.03p

Sewing: £1.00 per hour. Timing 10minutes = £0.10p

Finish and pack: £0.80p per hour. Timing 2 minutes = £0.03p

Overheads: 150% of labour costs = £
(J lee, Lecturer, 2012)

Transport Costs:
Sea Freight £29.03
Bills Of Lading Fee £35.00
UK Terminals £20.00
UK Port Security £3.50
UK Customs Clearance £29.00
UK Haulage £123.66
Total£240.19
Total divided by 10,000 = £0.02p per garment.
(Compare Cargo Rates. 2012. online)

Total cost: £

Costing sheet: Onesie. China.

Cotton – All over print: £1.30 per meter. 1 meter usage = £1.30

Thread: £0.20p a reel

Care label: 1 = £0.02p each

Binding: £1.00 meter. 0.20 meters = £0.20p

Poppers: £1.00 for 100. Usage - 8. =£0.08p

Swing tag: 1 = £0.05p each

Operations:

Laying and Cutting: £1.00 per hour. Timing 3 minutes = £0.05p

Sewing – And appliqué: £1.00 per hour. Timing 10minutes = £0.10p

Finish and pack: £0.80p per hour. Timing 2 minutes = £0.03p

Overheads: 150% of labour costs = £3.05
(J lee, Lecturer, 2012)

Transport Costs:
Sea Freight £29.03
Bills Of Lading Fee £35.00
UK Terminals £20.00
UK Port Security £3.50
UK Customs Clearance £29.00
UK Haulage £123.66
Total£240.19
Total divided by 10,000 = £0.02p per garment
(Compare Cargo Rates. 2012. online)

Total cost: £

China:
Strengths:
Vertically interacted supply chain
Upstream firms offer production of cotton, hemp, wool, silk and many other fabrics.
Downstream firms offer CAD, design, logistics, and financial capabilities
Strong foreign investment.
Continued industrial upgrading
Large population and efficient workforce.
Lower base cost labour
High intake margin – low buying costs

Weaknesses:
Falling external demand due to weakness of developed countries
Growing trade protectionism
Higher production costs from increases in raw materials and rising labour costs.
Long lead times.
European quota restrictions
Keeping check of ethical standards of workforce / production
Language and time barriers.
(J Carolan, Lecture. 2012)

PESTLE:
Political
China has recently made extraordinary efforts in modernising legal and economical system aimed to stabilise the growth of the country, however China remains a strictly controlled country.
Internal problems in China include growing corruption, increasing rural poverty and environmental degradation.
China has a very strong relationship with western countries and is likely to increase its influence in the region due to its expanding economy, but China also has difficult relations with neighbouring countries such as Vietnam, North Korea and Taiwan, ultimately China’s strained relationship with Taiwan could ultimately result in a war between the two countries.
(Term paper warehouse. 2012. Analysis – China. [Online] 21.04.2012)

Economical
The Chinese economy is characterised by its extraordinary size and growth. The GDP has grown steadily since 2003, peaking at 11% year on year growth.
The People’s Bank of China has raised the interest rates for five consecutive times in 2007, inflation is still very high with peaks of 6.2% in 2007.
Economic growth is still mainly driven by fixed asset investment and exports, however there has been a noticeable increase in private consumption.
(Term paper warehouse. 2012. Analysis – China. [Online] 21.04.2012)

Bangladesh:

About/history:
“Bangladesh has enjoyed 30 – year growth in its apparel and textiles exports but faces challenges from the global downturn and worker unrest.” (L, Miller. 2011. Online)
Bangladesh has been an important producer for the apparel industry for the past 30 years making up the bulk of the manufacturing with wovens, knits, sweaters and leather. Its export industry was originally built on raw fibre, and leather, but in the late 1970s the country moved into the apparel industry.
The first garment construction exported out of Bangladesh in 1977 and earned a mere $3,215. Since then the apparel export earnings have grown hugely and are now worth around over $18 billion. (WGSN, 2011, Sourcing guide: Bangladesh. [Online] 22.04.2012)

Bangladesh’s success is largely due to a skilled and very cheap workforce. The quick expansion of the apparel industry in Bangladesh was possible because of the use of less complicated technology, cheap and easy to operate sewing machines, and relatively cheap and abundant female workforce. However, apparel firms in the country have moved into a challenging position in the new millennium. The challenge is now to offer high-quality, low-cost products within a short lead time; and also to meet health, social and environmental compliances in the face of increasingly stiff competition. (More than Shipping, 2011. Bangladesh Booming. [Online] 22.04.2012.)
Compared to other Asian apparel the textile exporters, the size of Bangladesh’s business lags behind China, but is comparable to India. India has recently given Bangladesh a chance to reduce its trade deficit of over $4.5 billion by allowing 46 textile items duty-free access to market. Bangladesh already had duty free access to export 10 million garments a year to India; some say this will help the country become part of the production chain of a major economy. As well as garment production facilities, Bangladesh operates numerous mills that make yarn and fabrics and also engage in dyeing, printing and finishing.
The Bangladesh Textile Mills Association reports that its members produce 100% of the domestic fabric and yarn requirement, 50% of the cotton fabric for export of garments and 95% of the yarn and fabric needed for the export of knitwear.
(WGSN, 2011, Sourcing guide: Bangladesh. [Online] 22.04.2012)

Resources and availability:
Bangladesh’s garment industry has had s very successful year with significant improvements in export figures. After a muted performance in 2009, 2010, Bangladesh saw a 43% increase in exports driven from EU countries and the US. With the downturn of the economy, the large quantity of low cost labour in Bangladesh has seen more business shifting to the market as wages in China and India have become more expensive and Pakistan has struggled with political and environmental crisis. (WGSN, 2011. Sourcing guide: Bangladesh. [Online] 22.04.2012)
Bangladesh has less developed country status, which gives it more favourable market access in developed markets, it is also a member of the South Asia Free Trade Agreement, which has implemented a framework agreement to lower customs duties to zero on the trade of nearly all products in the region by the end of 2016. (WGSN, 2011. Sourcing guide: Bangladesh. [Online] 22.04.2012)
As production has grown in Bangladesh, employment in the apparel sector has increased steadily year on year, from around 200,000 in 1985 to 3.6 million in 2010, and women make up 80% of the workforce.
In November 2010 minimum monthly wages were raised by around 80% after months of protests over poor pay and conditions by garment workers. It has been said that workers want the rate raised, last raised in 2006, to triple what it was a month. (BBC, 2010. Bangladesh increases garment workers minimum wage. [Online] 22.04.2012)

"The wage board has said the minimum wage will be set at 3,000 taka, which will include medical and housing allowances." (BBC, 2010, Online)

Transport:

According to a report on WGSN, T-shirts are said to be the biggest export out of the country and were worth $3.1 billion in 2009/10. Bangladesh’s export business with both the EU and the US has grown rapidly, demand from the EU has said to have increased 46% from $7.19 billion to $10.5 billion, and now accounts for 58% of Bangladesh’s total ready made garment exports. (WGSN, 2011, Sourcing guide: Bangladesh. [Online] 22.04.2012)

Bangladesh freight systems consist of networks of waterways, roads, and railways. Inland waterways are important to the Bangladeshi transportation systems, they provide low cost transport and access to areas where land transport would be costly. Other freight systems in Bangladesh are also air, offering domestic services, however air transport of goods is very costly and not the most popular for large companies. (Britannica, 2012. Bangladesh. [Online] 23.04.2012)

Strengths:
Committed, skilled and low cost workforce.
Ability to produce fast fashion
Established production of cotton, wovens and yarns
Strong trade agreements and tax free concessions.
High intake margins – lowest in the world

Weaknesses:
Unreliable energy suppliers
Unrest among workers
Increasing wages limited choice of product categories
Environmental issues, flooding risks – annually.
Political instability
Workforce and production ethical checking.

Critical Path: Printed Tee – Bangladesh.

Sep 15th – 20th - Supplier calculates fabric and trims needed, actual quantities and size breakdowns to give to factories and printers. Factory meeting is held to go through requirements and specification sheets. Order is placed for all fabrics and components.

Ordering Components:

Fabric - Lead time 4 weeks
Thread - in stock
Labels – Lead time 4 weeks
Size tabs – Lead time 2 weeks
Care Labels – Lead time 2 weeks
Swing ticket – Lead time 3 weeks

Oct 20th – Lab dip, labels, and notions approved by buyer. All details have been approved and sent to order.

Oct 27th – After 4 week’s bulk fabrics together with all components are due at the factory.

Nov 3rd – Fabric panels and lay plans have been sent to manufactures and cut out.

Nov 4th – Nov 11th - All fabric front panels sent to printers, for Sainsbury’s own design to be printed.

Nov 13th – Fabrics brought together to be manufactured. Production starts, print screen of Tee’s have been finalised, all pieces have been sent to manufacture to be assembled, and everything has been overlocked together, with a twin needle finish.

Dec 13th – AQL, final inspections made quality control inspection taken out by buyers on production of sample size, Sainsbury’s toddler boys this will be sizes 3 - 4.

Dec 20th – All goods packed and ready factory for shipping dispatch.

Jan 20th – Goods arrive at customs, to be checked before being dispatched to the warehouse.

Jan 27th – Goods arrive in store.
(J lee, Lecturer, 2012)

Costing sheet: Tee. Bangladesh.

Cotton: £1.00 per meter. ½ meter usage = £0.50p

Thread: £0.20p a reel

Care label: 1 = £0.02p each

Brand label: 1 = £0.04p each

Binding: £1.00 meter. 0.20 meters = £0.20p

Ribbing: £1.00 meter. 0.10 meters = £0.10p.

Swing tag: 1 = £0.05p each

Operations:

Laying and Cutting: £1.00 per hour. Timing 3 minutes = £0.05p

Printing: £0.80p per hour. Timing 2 minute = £0.03p

Sewing: £1.00 per hour. Timing 10minutes = £0.10p

Finish and pack: £0.80p per hour. Timing 2 minutes = £0.03p

Overheads: 150% of labour costs = £0.31.5p
(J lee, Lecturer, 2012)

Transport costs:
Sea Freight £38.71
Bills Of Lading Fee £35.00
UK Terminals £27.00
UK Port Security £3.50
UK Customs Clearance £35.00
UK Haulage £123.66
Total£262.87
Total divided by 10,000 = £0.03p per garment.
(Compare Cargo Rates. 2012. online)

Total cost: £

Costing sheet: Sweat Pants. Bangladesh.

Cotton: £0.80 per meter.1 meter usage = £0.80

Thread: £0.20p a reel

Care label: 1 = £0.02p each

Brand label: 1 = £0.02p each

Elastic: £0.20p a meter. ½ meter usage = £0.10p

Pull string: £0.10p a meter. ½ meter usage = £0.05p

Swing tag: 1 = £0.05p each

Operations:

Laying and Cutting: £1.00 per hour. Timing 3 minutes = £0.05p

Printing: £0.80p per hour. Timing 1 minute = £0.01p

Sewing: £1.00 per hour. Timing 10minutes = £0.10p

Finish and pack: £0.80p per hour. Timing 2 minutes = £0.03p

Overheads: 150% of labour costs = £
(J lee, Lecturer, 2012)

Transport costs:
Sea Freight £38.71
Bills Of Lading Fee £35.00
UK Terminals £27.00
UK Port Security £3.50
UK Customs Clearance £35.00
UK Haulage £123.66
Total£262.87
Total divided by 10,000 = £0.03p per garment.
(Compare Cargo Rates. 2012. online)

Total cost: £

Ethics Policy:

Sourcing products direct to factory is the quickest and cheapest route for companies, however it is important for companies to consider the exploitation of workers in these factories, can companies still get the fast turn around they need and cheap rates without exploiting?
Sainsbury’s say that they form partnerships with their suppliers, which help them raise environmental and social standards to move towards real sustainability, when choosing the right supplier. Sainsbury’s will need to research into how the Chinese and Bangladeshi factories treat their workers and the environment, because unfortunately not all factories care about the exploitation of their workers, most of the western world will try to ensure that children are not apart of their workforce and that the workers that do work for these factories are treaded humanely and with respect. Factories need to make the work environment safe, and also have equipment like air conditioning units as the temperatures in both China and Bangladesh can reach a very high humidity, ensure the labour force are getting appropriate brakes and are working reasonable working hours, and are guaranteed at least, minimum wage. When it came to choosing the right factory to source from Sainsbury’s would need to think about the quality control the factory undertakes and the overall factory ethics. They will need to know that the factory can fully test and meet international specification guidelines and standards, and that the products tested are genuinely from the factory assigned to supply the products. (Promotrade to Asia. Unknown. Sourcing products. [Online] 23.04.2012)

Sainsbury’s have said again they try and work closely with suppliers as they are known for having a very strong ethical, FairTrade reputation.
“If we find an issue, it is discussed fully with the supplier, in order to understand its implications to find the best solution for addressing it. Our philosophy is not to pull out of a factory if issues are found. Whilst this would help protect Sainsbury’s name and reputation, it does not ultimately help the conditions and welfare of the workers.” (J.Sainsbury’s Plc. 2012. Online)
Sainsbury’s have said if they were to take their business away all of a sudden due to an issue from the factory where they were a major customer; this could have detrimental effects on the factory, and could lead to closure of loss of jobs. According to J.Sainsbury Plc, Sainsbury’s will discuss with the factory the opportunity for a continuous improvement programme. (J.Sainsbury Plc. 2012. Sainsbury’s responsibility. 23.04.2012)

Sainsbury’s are sourcing form countries such as China and Bangladesh, these countries both produce the raw materials needed, therefore an extra exportation cost isn’t needed to ship over these raw materials, they are known for producing fast fashion meaning that they can handle big orders and have a big turn around. And also even though the wages in both China and Bangladesh has recently seen a rise, they still compared to the UK have very cheap labour. This may all be well and good, however can Sainsbury’s really know exactly what their factories are always up to and how their workers are being treated, John Carolan for Sainsbury’s has said, the company has kept away from certain countries for example, Afghanistan, Africa and South America, to name a few due to how they treat their workers, and Sainsbury’s don’t want to take this risk and have that reputation of exploiting.
Sainsbury’s have said that eventually they aim to source back in the UK, there seems to be much more talk now about bringing sourcing back to Britain, and with wages in China and Bangladesh that seem to be constantly rising, the gab between wages in the UK, China and Bangladesh will soon not be much different, so why not bring sourcing back to the UK.